ManagementRisk Management

3 Signs Your Consulting Firm Will Fail

Armageddon, apocalypse, doomsday, Ragnarok—the end goes by many names, and in spite of how cool they all sound, nobody looks forward to any of them. Likewise, nobody wants to work for a failing consultancy, but there are a few obvious signs that things could be headed south. In a post at his blog, Lew Sauder discusses three of them:

  1. Cutting costs
  2. An expanding bench of consultants
  3. A narrowing pipeline

Tick Tock

If nice perks like reward lunches are going away and travel expenses are garnering increased scrutiny, that is never a good sign. Likewise, although Sauder does not reference it, it could be a bad sign if the firm reduces the cost of its services in an effort to attract more customers, because it is a technique that seldom works as intended. A consultant almost never wants to decrease prices.

Healthy-sized consultancies always have at least a few consultants “on the bench,” so that when new business is won, there are some consultants immediately ready to go. If too many consultants are on the bench, it means there is not enough work to go around. People on the bench might just be laid off as a result.

A narrowing pipeline is the last and most obvious sign of a failing consultancy. Maybe the business is not striking enough of a balance maintaining current business relationships and finding new clients, or maybe the sales staff is falling short in some way. Sauder explains some additional reasons why work might dry up:

Sometimes firms lose their strategic direction. They focus on technologies and business approaches in which clients are no longer interested. If it takes the firm too long to recognize changes in trends, it may be [too] late to adjust.

When the sales pipeline begins to ebb, the firm begins laying people off. This may be to cut the cost of a bench that’s too large, or an effort to remove employees that have obsolete skills.

Sauder concludes that all consultancies have their ups and downs, so there is no reason to believe a downturn guarantees doom. Business is all about learning what works and does not work and taking the proper measures to ensure more right actions are taken than wrong ones. You can view the original post here: http://blog.consulting101book.com/your-consulting-firm-will-fail/

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